What do you mean by "it reads" the device? If it does not show up as a new device in My Computer, nor in the new device wizard that should pop up, nor in Device Manager, need to find out what happens. What exactly happens when you plug in a USB device? And have you tried a few of them in different ports?
Anything happen before this issue? System crash, re-installed Windows, water spill, cursed by a gypsy?